E-Cig Tax Developed

EU countries are preparing to tax e-cigarettes under the same regime as normal cigarettes, in a move likely to increase prices and to prompt a fight by lobbyists in Brussels.

Recently, member states’ ambassadors agreed to take the first step by asking the European Commission to draft an “appropriate legislative proposal” in 2017. The project was endorsed without further discussion when the bloc’s finance ministers met on March 8.

The ministers’ draft conclusions said that e-cigarettes, as well as other “novel” products, could cause “inconsistencies and legal uncertainty” in the single market if they stayed exempt from excise tax. They also said excise duties or some “other specifically designed tax” on novel tobacco items, which use steam instead of smoke to put nicotine into people’s lungs, could help meet “public health objectives”. They added that work on the new tax regime should be “intensified” if “the market share of such products show a tendency to increase”.

Under existing rules, all EU countries must impose an excise tax of at least 57% on tobacco products, but most impose only VAT on e-cigarettes at a level of about 20%. One of the EU officials said the next steps would be “to undertake studies, carry out impact assessments, [and] a public consultation”, setting the stage for a new lobbying war in Brussels.

Commenting on the “public health” aspect of the excise tax project, Olivier Hoedeman, from Corporate Europe Observatory (CEO), a Brussels-based pro-transparency NGO, said: “It would be quite awkward to put e-cigarettes in the same category [as normal cigarettes] if the science isn’t there yet”.